Publishing consultants want to foster competition among retailers by making consumers miserable
May 29, 2014 | 6:40 pm
I’m not a publishing industry “insider.” I admit that. I know I pontificate from time to time, and have opinions very strongly expressed, but sometimes I have to remind myself that I’m “just” a consumer and a very interested onlooker who’s been observing the field from the outside for the last ten or fifteen years.
From my perspective, it often seems like publishing industry folks don’t seem to know what they’re doing. Nonetheless, you know the old saying about what is done by those who can and those who can’t. I keep telling myself, this is how these people earn their living. They must know something I don’t.
But then I see articles like this one in Publishers Weekly, about competing with Amazon on print and digital fronts, and I start to wonder.
Most of the article is all right, talking about the size of Amazon’s influence in the industry and what various businesses are doing to try to compete. As far as the size goes, I have to admit the figures they came up with are impressive. If those figures can be believed, Amazon is responsible for 41% of all book purchases, whether on-line or in a store, 65% of all online book units, and 67% of e-book units.
Those are some rather impressive numbers, and show just how much power Amazon wields over the book market. Nonetheless, every one of those customers could, at least in theory, order books from Barnes & Noble instead if they wanted to. it’s not like Barnes & Noble is hard to find, or Amazon is blocking customers from getting to their web site somehow. At least insofar as paper books are concerned. E-books are another matter, but I’ve already talked about that.
As for the competitive efforts, Barnes & Noble is revamping its e-commerce web site for 2015; independent booksellers are signing up with the ABA’s IndieCommerce online shopping product; another company called Readerlink is looking into selling print books online.
But then they go and talk to Peter Hildick-Smith, CEO of the Codex Group. Last year, we briefly quoted Hildick-Smith arguing that publishers should protect physical retail stores. His stance doesn’t seem to have changed much.
Hildick-Smith believes that if publishers want to help ensure a diverse marketplace, they need to move back to agency pricing on e-books once the court-order restrictions expire, and to return to windowing. Hildick-Smith believes publishers should follow the film industry’s successful model of releasing new content in premium format first, followed by discount formats in later releases. Hildick-Smith has been a longtime supporter of windowing as a way to "give bricks-and-mortar stores a chance to do what they do best," noting that Amazon’s own bestseller publishing program has struggled without physical-world retailer support. (One possible roadblock to windowing are reports that Amazon’s contract prohibits the practice.)
Acknowledging that a move to windowing would mean that publishers would need to market both title releases, Hildick-Smith believes that the combined sales of a print first release and delayed digital edition would bring in more revenue than what publishers are earning now from the simultaneous release of hardcover and e-book formats. And, just as important, windowing would help maintain a diverse book marketplace. The way current trends are going, Hildick-Smith says, in a couple of years the American book market could look a lot like the U.K. market, with relatively few bricks-and mortar stores.
What color is the sky in his world?
Windowing doesn’t work. It’s been repeatedly proven not to work. It doesn’t lead to any additional print sales (and why would it? If someone wanted the print book, they’d buy the print book whether the e-book was windowed or not) and it actually decreases sales of the e-book as people either pirate a scanned version of the print book or forget they wanted it by the time it comes out.
(And given that, according to the latest Author Earnings report, e-book sales account for 46% of fiction sales revenue and 59% of fiction unit sales, I would say that if it’s a matter of “protecting” print book sales, that battle has already been lost. Windowing will harm the type of media that accounts for the majority of fiction unit sales more than it will help the one that makes up the minority.)
In a rare display of common sense, even Macmillan CEO John Sargent acknowledged it doesn’t work:
Windowing, however, was widely acknowledged by publishers to be a flawed tactic. Macmillan’s John Sargent noted in an e-mail that the practice was not economically favorable to publishers, nor was it likely to change Amazon’s behavior. And it was likely to increase piracy, as frustrated consumers would look to rip windowed books from the Internet. In a blunt assessment, Sargent said windowing “actually made no damn sense at all” and predicted disaster “if we keep doing it.”
—Albanese, Andrew Richard (2013-06-18). The Battle of $9.99: How Apple, Amazon, and the Big Six Publishers Changed the E-Book Business Overnight (Kindle Single) (Kindle Locations 387-391). Publishers Weekly. Kindle Edition.
That was why the publishers only ever windowed 37 books, and decided to drop it in favor of colluding illegally to fix prices instead. (And Apple even tried to argue this at its trial: “If they hadn’t taken control of prices, they’d have had to window, and nobody would have wanted that.”) And yet, people like Hildick-Smith and this comic book shop guy still push for it, as if delaying the availability of the e-book will somehow magically cause all the people who prefer e-books to buy it in paper instead, rather than just go out and pirate it in e, check it out from the library, or not buy it at all. Seriously?
As for that bit about being more like the film industry, the film industry has been moving to reduce windowing itself. In a couple of high-profile examples (Veronica Mars and Joss Whedon’s In Your Eyes) the movie has been made available online at the same time it was released in theaters, and they seem to be doing just fine.
The next bit is even richer:
Ardy Khazaei, former Bookish CEO and now an industry consultant, also believes a move to agency pricing would help other companies compete more effectively with Amazon, at least on the e-book front. Publishers, Khazaei feels, also need to be prepared to change and broaden their marketing messages to let consumers know where they can buy books other than Amazon.
Ah yes, the CEO of that “book recommendation site” that was created to plug three of the big six publishers’ e-books, but flopped so badly it ended up being bought by “social e-book retailer” Zola Books earlier this year, after only a few months of operation. Clearly, this CEO knows what he’s doing and is someone we should all listen to! Hey, maybe we should change that old saying to “Those who can, do. Those who can’t, consult.”
Yeah, sure, agency pricing might help other e-book companies compete with Amazon. While indie self-pub writers set their prices lower and eat the publishers’ lunch even more at every e-book company. Over on hotbeds of self-pub advocates, like The Passive Voice, Joe Konrath’s blog, and so on, you can see indie writers dearly hoping the Big Five get their way and impose agency pricing again, so they can make that many more sales.
One of the frequent complaints you hear from Big Publishing advocates is that Amazon treats books like widgets, as if every book is a perfect substitute for every other book. But books are special snowflakes! “If you want to read War and Peace,” they say, “you won’t be satisfied with Twilight.”
But the thing is, while particular books may not be fungible with each other, people’s reading time is. Most people have more than one book they’d like to read. Indeed, they often have more things they’d like to read than they have time to read. So unless they’re really desperate to read one certain specific book at that particular time (which does happen, granted, but probably not as much as publishers would like to think), if it’s not priced reasonably they’ll shrug and go to the next book that looks interesting that they can actually afford.
Maybe someone wants to read both Twilight and War and Peace, but can’t afford Twilight, so goes with War and Peace instead. (Which, since it’s in the public domain, is actually free. So it’s a lot cheaper than Twilight even if Twilight was reasonably priced!) In that case, any book (out of those books the reader wants to read or thinks looks like fun) is a perfect substitute for any other.
The Big Six publishers sold fewer books under agency pricing. (And Random House made out like a bandit during the year it didn’t agency price, then its revenues took a similar drop when it did.) That’s a fact that was proven in the statistics presented during the Apple trial. And if it’s so important to publishers that other e-tailers should be able to compete with Amazon that they’re willing to gut their and their authors’ royalties to aid in that cause, I would suggest that those authors really should be asking themselves whether these publishers really have their best interests at heart.
Khazaei goes on to suggest that publishers should go ahead and develop their own e-book ventures, independent of Amazon. (Hey, like Bookish was supposed to be? That really worked out well!) I would actually tend to agree that would be a good idea, especially if they dropped DRM. Kazaei says something about publishers being afraid of annoying their retail partners. But Baen seems to be selling its own e-books just fine still, with the caveat that the monthly bundles aren’t available past the e-books’ official release date anymore. Amazon, B&N, Kobo, and Apple don’t seem to have any problems competing with Baen itself. So why should they with any other publisher?
Of course, even if they did make their own e-book stores, they’d still be playing second fiddle to the convenience of Amazon. But it would at least be a start. Though if they put the same level of expertise into their stores that they did into Bookish, I’m not sure Amazon would have anything to worry about regardless. Seriously, why is anyone still even listening to that guy?
Someday, big publishers are going to have to start paying attention to the consumers, the people who actually buy and read their books, rather than worrying about the terms they can pry out of the stores. We’ve made it known over and over again that we don’t like high prices and we don’t like windowing. Why do these “consultants” keep pushing those things as if they think we’re just kidding? If the publishers have their way, unless they get a clue, sooner or later they’re going to ride their buggy whip manufacturing industry right down into the dust, while the self-publishing horseless carriage makers thrive.